Dell: U.S.-China Hacking Spat Not Hurting China Business

Washington and Beijing have been accusing each other of hacking and other cybersecurity violations,raising concerns that U.S. firms selling network or computer equipment in China could be caught in the crossfire. But U.S. technology firm Dell, which is the largest vendor of computer servers in China, says its business there hasn’t been hurt.

Motorcyclists ride past ‘Unit 61398′, a secretive Chinese military unit, in the outskirts of Shanghai in February. The unit is believed to be behind a series of hacking attacks, a U.S. computer security company said.

REUTERS

“We don’t see any impact on our business,” said Amit Midha, who heads Dell’s Asia Pacific operations. “We feel that this is something that is going to get worked through over time between the two countries.”

Dell also sells PCs and storage products in China, as well as software and other technology services.

The tensions over cybersecurity escalated in May, after U.S. Justice Department indicted five Chinese military officers for allegedly hacking U.S. companies’ computers. Also in May, the U.K.’s Guardian newspaper published an excerpt of Glenn Greenwald’s book in which the journalist asserted the U.S. National Security Agency had planted intelligence-gathering “backdoors” in U.S. suppliers’ networking gear before they reached foreign customers. China-based consultants and industry experts have said Chinese government agencies and state-run businesses could gravitate toward domestic suppliers to replace U.S. vendors.

“I think both countries have to engage with each other, and strategic dialogue is under way right now,” said Midha, who is based in Shanghai.

Dell’s clients in China include government agencies and state-owned companies, but those clients account for a relatively small part of its overall China operations, Midha said.

Midha also said that although Dell is an American company, it’s not necessarily providing its clients American – or even Dell – hardware and software. Clients can, for example, buy Dell’s servers but use Chinese operating systems. Or they can buy servers and storage from Chinese vendors and work with Dell on software and services, he said.

“We are giving them choices. We feel this approach should work in China,” Midha said.

In China, Dell is the largest vendor of x86 computer servers – the type of servers that take up the majority of the Chinese market. In the first quarter, Dell accounted for about 20% of the x86 server market in China, ahead of domestic competitors such as Huawei Technologies and Lenovo Group, according to IDC.